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The Bitcoin Strikes Back

Soulskill posted about 2 years ago | from the digital-boom-and-bust dept.

Bitcoin 344

smitty777 writes "Slashdot readers are no doubt informed of the infamous crash of Bitcoin. In fact, its demise was followed closely here. Wired has a recent article tracking Bitcoin's climb out of chaos. Valued at $17 before the crash, it had lost 90% of its value due to the hacking incident, down to a low of $2. It climbed back up to $3 in December, and is currently valued at $4. From the article: 'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.' Still, Bitcoin has significant obstacles to overcome, such as covert mining, criminal uses, and other security issues." Amir Taaki of the Bitcoin Consultancy (who did an interview here a while back) disputes the reasoning and the conclusions in the Wired article.

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Criminal uses? (5, Informative)

Anonymous Coward | about 2 years ago | (#38485168)

Regular money has criminal uses. The security concerns are also a non-issue as regular wallets and bank accounts are routinely stolen and money diverted.

Re:Criminal uses? (1, Insightful)

GameboyRMH (1153867) | about 2 years ago | (#38485198)

True but bitcoins are completely untraceable and the cops can't even tail you to see you exchange them like cash. Many child porn sites and contraband trading sites on darknets take payment in bitcoin.

That said, the genie is out of the bottle now so there's no going back. Might as well make the positive uses outweigh the negative. So far the best positive I've seen has been the lulz generated by bitcoin miners.

Re:Criminal uses? (4, Informative)

Anonymous Coward | about 2 years ago | (#38485246)

But they're not completely untraceable.


Yes, you're probably safer than using a credit card, but it's never going to be as safe as paying in cold hard cash.

Re:Criminal uses? (2)

GameboyRMH (1153867) | about 2 years ago | (#38485290)

It's still safer than cash, which can't be traded through a proxy on a public wifi AP. The transactions are traceable only to meaningless, untraceable usernames.

Re:Criminal uses? (2)

zill (1690130) | about 2 years ago | (#38485326)

What if I want to buy a car or a house with my bitcoins? I would need to go through one of the exchanges, where they have my real name and bank account number. So much for "meaningless, untraceable usernames".

It's only untraceable if I only brought ATI video cards, web hosting, and marijuana for the rest of my life.

Re:Criminal uses? (1)

repapetilto (1219852) | about 2 years ago | (#38485348)

Why would you need to go through an exchange?

Re:Criminal uses? (2)

zill (1690130) | about 2 years ago | (#38485352)

Because my real estate agent and the car dealership won't accept bitcoins.

Re:Criminal uses? (1)

repapetilto (1219852) | about 2 years ago | (#38485420)

Right, so the "problem" is on the USD end of the transaction.

Re:Criminal uses? (1)

zill (1690130) | about 2 years ago | (#38485456)

Exactly. Like I said before, if I only buy "ATI video cards, web hosting, and marijuana", there's no problem at all.

Re:Criminal uses? (0)

Anonymous Coward | more than 2 years ago | (#38485754)

Huh... I guess I am just imagining having this Xoom tablet, watercooling rig, Battlefield 3 game, e cig (like the above), potato chips, Frozen Synapse game, Cat ears (custom made for a friend), and about 30 other physical objects that are not ATI video cards, or Marijuana sitting around my house that were purchased with bitcoins.

Crazy... guess it's all the marjiuana I didn't buy with bitcoins.

Re:Criminal uses? (5, Funny)

Anonymous Coward | about 2 years ago | (#38485362)

"It's only untraceable if I only brought ATI video cards, web hosting, and marijuana for the rest of my life."

i fail to see the problem

Re:Criminal uses? (1)

shentino (1139071) | more than 2 years ago | (#38485742)

Not to mention both your car and your house have paperwork.

A title, and a deed, respectively.

You Hate It But It's True! (-1)

Anonymous Coward | about 2 years ago | (#38485354)

Q: What do nigger kids get for christmas?

A: Your bike.

Re:You Hate It But It's True! (-1, Troll)

PopeRatzo (965947) | about 2 years ago | (#38485450)

Q: What do nigger kids get for christmas?

A: Your bike.

Congressman Paul, you've got to stop that. People find it offensive. Well, not the ones that would vote for you, but many other people find it offensive.

Anyway, it's time for your sitz bath. If you come along nicely, I'll read to you from the Nat Turner Diaries.

Re:You Hate It But It's True! (-1)

Anonymous Coward | more than 2 years ago | (#38485634)

Who finds that offensive? People that had their bike stolen by niggers? People that lock up their bike because they're afraid niggers will steal it? Niggers that steal bikes? Yeah, I guess they might be offended.

Re:Criminal uses? (5, Funny)

larry bagina (561269) | about 2 years ago | (#38485320)

Personally, I buy my coke with bitcoins, use a credit card to cut it into lines, then a rolled up $20 to snort it.

Re:Criminal uses? (0)

Anonymous Coward | more than 2 years ago | (#38485560)

Paying in cold harsh cash is much unsafer than buying drugs with bitcoin. You have to deal with the drug dealer in person, and actually find the dealer.

Re:Criminal uses? (5, Informative)

Anonymous Coward | more than 2 years ago | (#38485672)

Many child porn sites and contraband trading sites on darknets take payment in bitcoin.

OMG! OMG! Think of the children!

There is no such thing as 'child porn sites' that take any payment. One must be a child molester and deliver 'original content' in order to be accepted in trading rings. This is well documented by the police and explain the difficulty for them to infiltrate the child pornography networks. eg: They will not rape a child to be accepted and gather evidence.

You are full of shit. Thank you for contributing to the set back of, freedom enabling, anonymous money usage by spreading disgusting FUD.

Re:Criminal uses? (2)

Goaway (82658) | about 2 years ago | (#38485208)

Regular wallets can not be stolen with a computer program. Stealing money from a bank account is possible for a program, but there are ways to recover it after the fact, unlike with bitcoin.

Re:Criminal uses? (0)

Anonymous Coward | about 2 years ago | (#38485324)

It's wonderful to hear you've finally finished your teleporter! I assume this based on your gripe being bitcoin has not permanently solved computer security which it didn't set out to do... leaving the only limitation of physical money its inability to pop into existence at a remote location. But you've done it! Bravo! Tell me, how did you solve the problem of recomposing matter more than once or at multiple locations (the double-spending problem)? Oh, no bother, you probably just used the bitcoin protocol to handle that!

Re:Criminal uses? (0)

Anonymous Coward | about 2 years ago | (#38485438)

Could you try saying that again, but this time, do it like you were not a completely crazy person?

Re:Criminal uses? (1)

repapetilto (1219852) | more than 2 years ago | (#38485542)

The money replacing that which was stolen is coming out of someone else's pocket.

Re:Criminal uses? (1)

lkcl (517947) | more than 2 years ago | (#38485826)

precisely. just like in "real life" with "real" money. you know - the stuff that is printed on-demand with no link to reality? (read senator ron paul's book "end the fed")

Re:Criminal uses? (0)

Anonymous Coward | more than 2 years ago | (#38485802)

I decline, but am amused.

Re:Criminal uses? (3, Informative)

lkcl (517947) | more than 2 years ago | (#38485598)

Regular wallets can not be stolen with a computer program. Stealing money from a bank account is possible for a program, but there are ways to recover it after the fact, unlike with bitcoin.

err, no. the banks are willing to *refund* the "electronic" money that is stolen, by replacing it with another lot of "electronic" money. and neither the police nor the bank of england (or whatever) will print you another bank note with the same serial number, will they?

so all that's required to "emulate" the present situation is for someone to set up an online bitcoin bank, and to offer the same "insurance" against theft as regular banks. of course, that means that they will need to charge for the service, and will need to be happy with the massive fluctuation in the currency. actually what would happen is that that bank would bitch like hell that it was your fault and that you didn't have the right anti-virus updates, and would delay the insurance claim just like any other bank.

Re:Criminal uses? (1)

makomk (752139) | more than 2 years ago | (#38485666)

The general reckoning is that the biggest theft from online bitcoin "banks" was the work of the owner, who did a runner shortly thereafter, so that doesn't actuallly help much.

Re:Criminal uses? (1)

artor3 (1344997) | more than 2 years ago | (#38485540)

It's the difference between assault rifles with silencers and armor piercing rounds, compared to regular hunting rifles. Both can be used for criminal purposes, but one is particularly well suited to those purposes while only having minor benefits for legal purposes.

I'm not saying bitcoin should be illegal, since the criminal purposes aren't nearly as dangerous as those involving high powered weaponry, but it is an obstacle that would need to be dealt with if the people behind bitcoin want it to actually gain acceptance.

Re:Criminal uses? (2)

garyebickford (222422) | more than 2 years ago | (#38485636)

Both can be used for criminal purposes, but one is particularly well suited to those purposes while only having minor benefits for legal purposes.

I don't know, assault rifles can be very useful - especially when the bunnies fight back - I don't know where they get their armament, but with the whole 'pop up out of a hole, spray the attackers, dive back down the hole and show up at another one' tactic, they can really decimate my team. Bunnies - they're a lot more hard core than that cute+fuzzy image!! It's a good idea to enlist a few former SEALs to lead the penetration tem, just to assure you can get through their lines and into the inner sanctum. Peter Cottontail, my ass!

Re:Criminal uses? (1)

lkcl (517947) | more than 2 years ago | (#38485570)

yes. a friend of mine pointed out that bitcoin would not be considered a "serious currency" until you could buy drugs and pay for sex with it. then he found out that there is a web site that accepts bitcoin payments and will mail you some drugs, anywhere in the world. all that's left now is to find an intelligent and enterprising prostitute willing to understand and accept bitcoin, and we'll know that bitcoin has come of age, hurrah!

Re:Criminal uses? (1)

m50d (797211) | more than 2 years ago | (#38485578)

The security concerns are also a non-issue as regular wallets and bank accounts are routinely stolen and money diverted.

For a regular bank account you get your money back when that happens.

Propaganda (5, Insightful)

Anonymous Coward | about 2 years ago | (#38485180)

The speculators push the price up, pay for press releases and stories, put up blogs talking about how awesome Bitcoin is... then they get out as soon as it starts selling for enough. They've done it once, judging from this article they're doing it again, are people going to fall for it again?

Re:Propaganda (2, Interesting)

Anonymous Coward | about 2 years ago | (#38485228)

'Bitcoin boosters have traditionally suggested that Bitcoin is an alternative to [the world's] currencies. But we'll suggest an alternative explanation: that Bitcoin is not so much an alternative currency as a "metacurrency" that allows low-cost and regulation-free transfer of wealth between nations. In other words, Bitcoin's major competitors aren't national currencies, but wire-transfer services like Western Union.'

Sounds more like they're saying get in and out as quickly as possible, do not keep wealth or speculate on bitcoins, just push money in and let someone somewhere else convert the coins back into real money ASAP.

That's pretty much the opposite of what speculators want (The proposed use is highly liquid so harder to bubble).

Re:Propaganda (2, Insightful)

Anonymous Coward | about 2 years ago | (#38485502)

They've already had one bubble (a quite marvellous one, straight out of the text books). I think at this point there are many disillusioned "investors" that want out. Some people even claim they invested all their savings [falkvinge.net] in bitcoin. That's gotta smart right now.
As long as they can lure new people with money into the system, they can dump slowly dump their coins without crashing the market again.

Re:Propaganda (0, Troll)

Anonymous Coward | about 2 years ago | (#38485392)

Ok.. so its at $4.. Which press release did we 'pay' for ? This slashdot? Please....

You guys are all entitled to your opinion but the majority of you have no idea whats going on with the Bitcoin community what so ever.

  The guy with the 'dropping bitcoin nodes'... What proof do you have of that?
Right now Bitcoin bootstraps off an IRCd to find nodes but there are several other bootstrapping methods for which you can not guage the amount of peers.

  Yeah, maybe the amount of miners has decreased but there are still plenty. Miners dont make the network; People spending Bitcoins for services does. Bitcoin has hit an all time high for trading amounts so even if the miners are decreasing, the trading is increasing.

  I run a business that solely accepts Bitcoin for payment (www.bitvps.com shameless plug) and business is doing just great.

Re:Propaganda (3, Informative)

Goaway (82658) | about 2 years ago | (#38485454)

Miners dont make the network;

Actually, it is the miners that literally make the network.

Re:Propaganda (1)

lkcl (517947) | more than 2 years ago | (#38485620)

yes of course they will "fall for it", because people are running automatic programs which offer exchange of money for bitcoins and vice-versa.

Covert Mining (1)

Anonymous Coward | about 2 years ago | (#38485214)

How is this an issue? IMHO if I had to get a virus I would much rather it mine for bitcoin rather than mine my bank account.

Cause of the crash (1)

Anonymous Coward | about 2 years ago | (#38485242)

The main loss of value was due to the bubble bursting, not the hacking.

The hacking incident certainly didn't help though.

Building a case... (4, Interesting)

benjamindees (441808) | about 2 years ago | (#38485250)

Pay attention to what is going on here, because you will start to see it in other areas as well.

The establishment (through the media) is attempting to build a consensus that Bitcoin is not a legitimate currency, but a "money transfer service". "Money transfer" is a service that carries with it the implication of guarantee against loss of value during that transfer. It is a regulated industry.

By branding Bitcoin a "money transfer service" in the eyes of the public, powerful banking interests will then be able to begin loading Bitcoin down with regulations. Large Bitcoin institutions may even go along willingly. Regulations create monopolies, and monopolies bring higher rents.

This is the classical method in which the free market is subverted by government regulation, and creeping nanny-statism benefits large, risky centralized corporate interests at the expense of main street. It is the prisoner's dilemma in action. So pay attention as it plays out.

Re:Building a case... (4, Interesting)

GameboyRMH (1153867) | about 2 years ago | (#38485304)

Wow you've confused yourself by going into too many layers of libertarian paranoia. How the hell could Bitcoin be regulated or policed? Places operating on the web would just move to darknets and that would be the end of that.

Re:Building a case... (3, Insightful)

Omnifarious (11933) | more than 2 years ago | (#38485602)

One could make the same argument for the Internet. But now we have SOPA, which has a real chance of passing. It is true that SOPA will not actually stop piracy, and likely not even make a significant dent in it. But for the average person, the Internet will become a significantly more regulated and diverse place. Censorship masquerading as copyright enforcement.

There used to be (and mostly still is) a regime had censorship masquerading as media consolidation with the resultant centralized control over distribution. Sure, you can say anything you want, but your ability to reach an audience is gated by people who have a vested interest in making sure certain ideas aren't heard.

Regulation doesn't have to be absolute in order to succeed as a tool of social and economic control. It just has to be successful enough to make not following it seem like something only unsavory people do.

I don't necessarily agree with the grandparent. But I don't think his or her paranoia is unwarranted.

Re:Building a case... (3, Insightful)

petermgreen (876956) | more than 2 years ago | (#38485654)

If the US governement wanted to they could put a lot of pain on bitcoin. For example they could go after the financial transactions with offshore bitcoin exchanges (just as they now go after financial transactions offshore online poker sites). They could announce that anyone caught running an unlicensed bitcoin exchange was open to prosecution and that authorised exchanges were only to accept coins whose history could be traced back to either an authorised miner or to before the introduction of the rules. They could further introduce laws stating that authorised miners and exchanges were required to keep transaction records including bitcoin addresses, that using or operating a "mixing service" was a felony and so on..

Personally I think the reason they haven't done any of this yet is that bitcoin is too small for them to care. Afaict there are currently just under 8 million bitcoins in existence (and some unknown proportion of those bitcoins have been rendered irretrievable as the associated keys are lost) at $30 per bitcoin that gives a theoretical "market cap" of arround $240 million. The actual amount of money involved is probablly a hell of a lot smaller than the aforementioned theoretical market cap.

Re:Building a case... (0)

Anonymous Coward | about 2 years ago | (#38485360)

There are those who would argue that $ and € are not legitimate currencies because they are fiat money nowadays. You may not have heard of either of these symbols as currencies; the former is on your keyboard thanks to Pascal programmers ($feedface), the latter is on mine due to C programmers wanting to save a character (0xf€dface).

These so-called currencies will no doubt, as you suggest, one day be regulated, so you can rest assured I for one will pay attention.

Wait, you were just trying to be a pretentious snot, right? Because this is probably the first time I've ever seen or heard - on the net or off - someone argue that powerful banking interests are the classical way in which governments introduce a nanny state.

Have you played buzzword bingo twice recently, once with Ron and once with Barack?

Re:Building a case... (3, Interesting)

PopeRatzo (965947) | about 2 years ago | (#38485498)

creeping nanny-statism

The only "nanny-statism" we have is the government treating the corporations like badly spoiled children, giving them the biggest portions and the best bits. Catering to their needs and desires. Letting them make the rules (yes, including the regulations).

For the rest of us, there's actually less "nanny-statism" than there was twenty-five years ago.

On a related note, did you know there are fewer government workers today than there were during the Reagan Administration in the 1980s, despite the fact that there are about 100 million more Americans today?

Re:Building a case... (4, Funny)

artor3 (1344997) | more than 2 years ago | (#38485548)

And that's just step one! Next they'll use their bitcoin monopoly to buy fluoride to put in the water supply, corrupting our precious bodily fluids!

Re:Building a case... (0)

Anonymous Coward | more than 2 years ago | (#38485592)

Bitcoin is a peer to peer network. If a node comes online with different rules, it's ignored by the rest of the network. The only way to impose a rule would be a voluntary update to a different version.

Re:Building a case... (1)

billcopc (196330) | more than 2 years ago | (#38485752)

I don't care what the establishment is saying. From the day I found out about Bitcoin, crunched some numbers and made sense of it all, it seemed to me like a self-defeating system. The fact that are limited "coins" but exponentially increasing miners, combined with the fact that the current value of a coin is less than the cost of electricity to mine it, and has been for a long time now, have already doomed this concept beyond recovery.

The only good to come of this, is if I ever meet someone who blew a wad of cash on fancy GPUs to mine, I'm going to buy him a beer and laugh my fuckin' tits off.

Re:Building a case... (1)

Troed (102527) | more than 2 years ago | (#38485784)

Miners are moving from GPUs to FPGAs right now, just as they went from CPUs to GPUs early last year. Thus, for lead adopters the electricity cost of mining a bitcoin is a lot less than its current value on the market.

The next step, if Bitcoin survives, is most likely sASIC and then ASIC.

Re:Building a case... (1)

repapetilto (1219852) | more than 2 years ago | (#38485840)

There is no set "cost of electricity". If less people mine, it will become easier (cost less) to generate the coins.

Oh, give it up already, it was a niche quirk (2, Insightful)

Rogerborg (306625) | about 2 years ago | (#38485258)

What was the peak (notional) value? A few tens of millions of dollars? That's just noise. A few nerds, pimps and pushers got all excited, played with it for a while, then got bored. The number of bitcoin nodes has been dropping steadily even before the Bit Sploit, and that's coming from the true believers on the bitcoin forums.

Sure, it's fun to discuss the theory, but can we please stop pretending that it was or could ever be a real currency used by actual folks.

That's how money works (4, Insightful)

Rix (54095) | about 2 years ago | (#38485296)

It has value because we pretend it does.

So stop pretending about the US $, then.

Re:That's how money works - a shared hallucination (4, Interesting)

PureFiction (10256) | about 2 years ago | (#38485356)

"It has value because we pretend it does."

absolutely true!

fiat currencies are just as much a shared hallucination as bitcoin.

    at least bitcoins may provide more privacy...

Re:That's how money works - a shared hallucination (0)

Anonymous Coward | more than 2 years ago | (#38485690)

absolutely true!

fiat currencies are just as much a shared hallucination as bitcoin.

Any medium of exchange is just as much a shared hallucination as bitcoin. Things have value because we pretend they do.

Re:That's how money works (1)

Anonymous Coward | about 2 years ago | (#38485412)

The USD is a fiat currency, backed up by the most powerful military on Earth. That every dollar has "THIS NOTE IS LEGAL TENDER FOR ALL DEBTS, PUBLIC AND PRIVATE" written on it means if you live in the US, and you try to pay, oh idk a mortgage or something, with USD and the bank denies payment, if it goes to court, you have the police force saying that dollar is worth something and the bank needs to accept it; just like how if you say you don't need to pay anything the police will tell you yes, you do. Most people don't think about it, but pretty much all currency is based on coercion and debt. Since the Bitcoin has no value other than artificial scarcity, it has no way of remaining stable.

Re:That's how money works (1)

Anonymous Coward | about 2 years ago | (#38485464)

Close, but you're missing something. a) a trivial gold deposit at Ft. Knox. b) The political damage done to governments that massively deflate their fiat currencies. Bitcoin has neither to support it's value. Euro, as a fiat currency, still has value because the political liability and difficulty in artificially deflating it. Not that they're doing a fine job deflating it naturally. The US, by nature of it's fucked up government, and lack of concept of replacing government, has a higher political cost of artificially deflating currency. The Remnibi, however, is exactly how you described, except that the military backing it up is a hell of a lot larger than the US's, and they've got the US' economy by the balls.

Re:That's how money works (1)

Trepidity (597) | more than 2 years ago | (#38485562)

The gold deposit is actually pretty substantial; it's got a value equal to around 15-20% of the value of outstanding paper currency and coins.

Re:That's how money works (1)

Anonymous Coward | more than 2 years ago | (#38485610)

So, to come round full circle, why does gold have value?

Re:That's how money works (3, Interesting)

EdIII (1114411) | more than 2 years ago | (#38485750)

The Remnibi, however, is exactly how you described, except that the military backing it up is a hell of a lot larger than the US's, and they've got the US' economy by the balls.

The Chinese military is not larger than the US military in 1:1 terms overall. Ground forces? Well yeah. Duh. How do they get their military anywhere? They never have. Their only aircraft carrier is an ancient retrofitted throwaway from Russia that is being used for training and experience.

The US military on the other hand, has been in Korea, Japan, all over the Pacific, Panama, France, Germany, Vietnam, Italy, etc. just in the last 100 years. Probably more places, but you get my point.

It's a rather pointless comparison. The US has much smaller ground forces but an incredibly larger ability to move those forces anywhere in the world. China cannot, and has not, moved its military anywhere farther than its own continent. The US could never even begin to hope to obtain a beachhead on Chinese soil, much less sustain actual ground conflict.

It's a stalemate. China could never move and protect ground forces to US soil without air and sea support at least as large as the US. The US does not have enough resources in both ground forces and sea/air support to do the same.

Nobody has anybody by the balls. It's just a bunch of bullshit the 1% likes to have us argue about because it distracts us from the larger problem. I'll let you figure out what that actually is.

Hint: Somebody has somebody else by the balls, but neither side is a country.

Re:That's how money works (3, Insightful)

Richard_at_work (517087) | about 2 years ago | (#38485414)

The value of the US $ is in the fact that it's accepted at millions of places, not just in the US but around the world. Yes, it might only have a set value because we allow it to, but the real difference between it and BitCoin is the number of people willing to allow that set value. Personally i wouldnt accept any payment in BitCoin today, because i have no reasonable use for it as-is, and the exchange rate to another currency is nowhere near stable enough to be sure my balance doesnt become worthless overnight.

BitCoin doesn't have the momentum to be a viable fiat currency yet - look at the problems the Euro is currently suffering, and that's bing pushed by governments and huge financial institutions, did anyone really think BitCoin had a better chance?

Re:That's how money works (1)

Rix (54095) | more than 2 years ago | (#38485558)

Most people businesses will only accept one currency. That doesn't really impact the others.

The Euro is having trouble because of concerns about it's issuers. Bitcoin doesn't have any.

Re:That's how money works (0)

Anonymous Coward | more than 2 years ago | (#38485652)

Where is the euro in trouble? Its value still did not change much. Just some countries have trouble with their debts.

Re:That's how money works (1)

jonbryce (703250) | more than 2 years ago | (#38485808)

The Euro is in trouble in Europe because it doesn't have a single government controlling it, but rather 17 different Eurozone country members with different economic circumstances. What is suitable for Germany in the one extreme isn't suitable for Greece at the other extreme. I'm not sure exactly when the Euro will collapse (revert back to Marks, Drachma, Pseta and so on), but it will.

Yes there is a similar difference in the economies of the 55 or so states, territories and districts in the US that use the dollar, but there is a single federal government and federal tax system to hold it all together.

Re:That's how money works (1)

artor3 (1344997) | more than 2 years ago | (#38485556)

Those words you typed only have meaning because we all "pretend" they do.

The fact is that bitcoin has some serious flaws that prevent it from gaining acceptance as an actual currency. Those flaws have nothing to do with the fact that, like all monetary systems, it's based off a shared agreement of value. The flaws have much more to do with an uncontrollable supply, a reliance on machines that not everyone has, the risk of losing your wealth in a computer crash, and so on.

Re:That's how money works (1)

rtb61 (674572) | more than 2 years ago | (#38485674)

That's a foolish notion. All national currencies eventually are bound to the capital value of a country, it's land and resources. The currency drops in value when more is printed than the country is worth plus of course the manipulation of scum sucking pig currency speculators.

So you real value enemies are the nature of you reserve bank that defines how much of your currency is out there relative to the capital value of the country and of course shit eating currency speculators (the banks et al).

Stable currencies are bound to strict regulatory control of all currency transactions ie. strict limitation to what financial institutions can or can't do, putting the brakes on the speed of transaction (should be 24 hours minimum between buy and sell, strictly enforced and 72 hours for international transactions).

It is high time to gut the B$ money shuffling cream of percentages like a tax manipulations of financial institutions of any kind, especially the multi-nationals and most of the criminals behind it all should spend the rest of their lives in prison and have all their assets confiscated.

US $ has value because IRS requires payment in $ (2)

michaelmalak (91262) | more than 2 years ago | (#38485828)

It has value because we pretend it does.

So stop pretending about the US $, then.

The US $ is backed by guns. Domestically, by the IRS, which accepts payment only in $, even for bartered goods and labor. Internationally, by the U.S. military if an oil-producing country tries to go off the petro-dollar.

Granted, the US $ has no intrinsic value the way gold does, but there is more pretend going on with BitCoin than with the US $. Even with the pretend, I'm a fan of BitCoin due to its scarcity, anonymity, and digital transfer -- the trifecta of "digital cash" (normally only two of the three are possible). For the past ten years, I've argued to transportation departments that digital cash is a privacy-preserving alternative to EZ-Pass et al, only to deaf ears. The ability to subpoena time and location data is too valuable to police departments.

Re:Oh, give it up already, it was a niche quirk (2)

Teppy (105859) | about 2 years ago | (#38485496)

Peak value was around $200M in June, and current value is around $32M. Using Bitcoins as an investment is a lot like gambling. However...
I can assure you that as a *currency* Bitcoin is wonderful. I run Dragon's Tale [www.dragons] which is a cross between an MMORPG and a casino, and the game functions entirely in Bitcoins. Players routinely deposit anywhere from a few cents worth of Bitcoins to $100+ worth. Their account is credited immediately, they (and I) pay almost no transaction fees, there are no chargebacks to worry about, and when a player has a big win, they can cash out immediately.
Over the time that Dragon's Tale has been in development (we've been in open alpha for over a year), Bitcoin has been as low as $0.005 and as high as $32 each, and players who deposit still play for roughly the same USD amount. Our typical player deposits $1-$5 worth of Bitcoin to gamble with, and even if Bitcoin were to go back down to a half-a-cent, I'm quite confident that a typical deposit would be in the $1-$5 range.

Re:Oh, give it up already, it was a niche quirk (0)

Anonymous Coward | more than 2 years ago | (#38485626)

Stop adverposting on Slashdot, and go fix your wiki.

Re:Oh, give it up already, it was a niche quirk (1)

timeOday (582209) | more than 2 years ago | (#38485656)

Using Bitcoins as an investment is a lot like gambling. However... I can assure you that as a *currency* Bitcoin is wonderful.

In other words, you agree with the article that Bitcoin is useful as a money transfer service but not as a reserve currency. If it's easy to exchange but its value fluctuates a lot, the only reasonable use is to buy bitcoins with dollars and send them to somebody who immediately converts them back. In other words, to transfer funds.

But even that could be revolutionary. I'm one of those people who still hopes micropayments will become commponplace on the web. Right now the "currency" of exchange on the web is ad placement. Money flows into the system to buy ads, and flows out as people who've seen the ads buy real-world products. But that's an awfully lame "currency."

I wouldn't mind charging people a penny to send me an email. If they don't care 1 penny's worth, then I don't want it. And since the number of messages I send is on the same order as what I receive (since I'm not a spammer), it would roughly break even anyways.

Re:Oh, give it up already, it was a niche quirk (1)

makomk (752139) | more than 2 years ago | (#38485678)

Their account is credited immediately

I hope you mean "within an hour or so". Otherwise someone's probably robbing your site with fake transactions already...

Re:Oh, give it up already, it was a niche quirk (0)

Anonymous Coward | more than 2 years ago | (#38485774)

However, Silk Road and similar sites are still going strong on tor. Bitcoin is still a very useful tool for illegal trade, and this isn't going away.

solidcoin (0)

Anonymous Coward | about 2 years ago | (#38485268)

I don't hold any bitcoin personally, but I will say the valuation trend of the past few months was entirely predicted by myself and others-way back around the initial crash from $32. It has enough momentum from diehards to suppress even functionally superior and safer crypto currency protocols like solidcoin. The crowd here will continue to jeer until their judgement is proven wrong. It will be many years.

Re:solidcoin (0)

Anonymous Coward | about 2 years ago | (#38485478)

solidcoin is trash. bitcoin price might be crashing, but solidcoin itself was crashed because the person who codes it doesn't understand bitcoin enough before trying to change how it works.

Fucking hilarious. (1)

Anonymous Coward | about 2 years ago | (#38485300)

Seems like both Slashdot and the people advertising Bitcoin just can't stop jacking each other off, can they? All those wonderful, astroturfed articles extolling the virtues of Bitcoin, then the bottom drops out of it faster than the lights go off when you hit the switch. Now they're trying to explain away its inadequacy by claiming that it doesn't actually "compete" with real money, even though that's what its proponents have been claiming from the very beginning.

How much does it cost to buy an editor on Slashdot? Maybe I should start asking the rejects from BoingBoing, they only wind up becoming editors here anyway.

Re:Fucking hilarious. (0)

Anonymous Coward | about 2 years ago | (#38485378)

Exactly. It was moronic to think it could work - anyone with a brain could see the obvious pyramid scheme. It's sad to see how otherwise intelligent people could get so blinded by their own greed...

Slashdotters are the first to ridicule other people for getting swept up in Nigerian prince scams and their ilk, but when it comes to bitcoins, man they fell hook, line and sinker for one of the oldest scams in the book wrapped in a technobabble coat.

Re:Fucking hilarious. (0)

Anonymous Coward | more than 2 years ago | (#38485524)

anyone with a brain could see the obvious pyramid scheme

The value of my bitcoins are not related to whether you have any, or not. Thus it can never, by definition, be a pyramid scheme. /someone with a brain

Re:Fucking hilarious. (0)

Anonymous Coward | more than 2 years ago | (#38485700)

But the first ones in got them for less computation than later ones, so the later 'miners' are effectively subsidizing the earlier ones. Would you be fine with me having millions of them for free if they didn't affect the value of yours? Of course, I couldn't - if I suddenly got lots for free, and thus would devalue yours.

So, basic pyramid scheme with a new wrapper on it - that's all there is to it. The whole thing is a scam. They're intrinsically worthless, anyone exchanging goods for them is getting scammed, with later adopters subsidizing the early ones.


Re:Fucking hilarious. (0)

Anonymous Coward | more than 2 years ago | (#38485764)

Ah, you're one of those "I wasn't smart enough to buy Apple stock when they were cheap and I think it's unfair!!!!11"

Me neither. The difference is I don't bitch about it. It's also completely irrelevant.

bitcoins are curious (-1)

Anonymous Coward | about 2 years ago | (#38485310)

People that have lots of bitcoins think bitcoins are great and there's great future in them.

People that have some (like me) think bitcoins are curious, and there's nothing inherently wrong with discussing them.

People that do not have any bitcoins think bitcoins are stupid, wasteful and go against basic economical principles.

That's it, really.

Who cares about "criminal" uses? (1)

Rix (54095) | about 2 years ago | (#38485336)

Bitcoin isn't a national currency. National laws don't apply.

Re:Who cares about "criminal" uses? (0)

Anonymous Coward | about 2 years ago | (#38485402)

Laws dont apply to currency anyway (well, most don't). It's people. If you're involved in a criminal transaction, the currency used barely matters. If people are using bitcoin to covertly more 10s ofthousands of dollars around, they got what they deserved when it crashed.

Re:Who cares about "criminal" uses? (1)

lightknight (213164) | about 2 years ago | (#38485474)

Agreed. Today's posting appears to be (yet another) attempt to manipulate Bit Coin prices. Whenever there's a bit of good publicity for Bit Coin (with the associated rise in price), you need only wait a day or two, and another posting will be made talking about some sordid array of illicit uses, and the price drops again.

Were it not for the constant misinformation that magically reappears with every one of these postings, I'd have no way to track them.

C'mon, Slashdot admins (4, Insightful)

93 Escort Wagon (326346) | about 2 years ago | (#38485344)

Please, PLEASE add "BitCoin" to the "Exclude stories by topic" /. site option.

Re:C'mon, Slashdot admins (0)

Anonymous Coward | about 2 years ago | (#38485428)

Along with microsoft, apple, nokia, sony. I thought that there was a key word filter but never worked for me. So topics and firms eserve a plonk. Key word exclusion please.

Value timeframe (0)

Anonymous Coward | about 2 years ago | (#38485366)

Bitcoin has value over minutes, hours or days. As a store of value compared to dollars or gold, who would even presume tat till proven?

It may be time for new transfer services beyond Paypal (quick list wanted), but as a competitor to silver, oil or 5 year treasuries? Nope.


All hail Mac OS X. (1)

JimCanuck (2474366) | about 2 years ago | (#38485416)


And people say Apple computers are immune to malware.

Re:All hail Mac OS X. (1)

ericloewe (2129490) | about 2 years ago | (#38485506)

Apple fanbois say that. Nobody else does. Hey, it's actually ground for a class-action suit, since they advertise them as "virus-resistant"! Let's all buy Macs en masse and hire some shady russian coders to create a virus for OSX. In the end, we still won't have abused the legal system as much as Apple does.

Stability (4, Insightful)

Xugumad (39311) | more than 2 years ago | (#38485512)

Yes, because relative value of a Bitcoin vs USD is really what's holding the currency back, and not, in fact, the massive price instability.

Realistically, people don't want to use a currency that gains 1000% in value, then drops again, then up 200% in only a few months. Until you can pay your taxes in Bitcoin, you're going to have to convert money out of Bitcoin ASAP after getting it, to ensure you can actually meet future obligations, and that makes it a right pain to deal with.

Why the quoted price of Bitcoin doesn’t matt (4, Insightful)

Beautyon (214567) | more than 2 years ago | (#38485576)

Bitcoin is a very new technology, even though the concept that it brings to life is decades old. The double spending problem has been solved; this means that it is possible to use a digital certificate to stand in the place of money and be sure that no one else can spend that certificate other than you as long as you hold it. This is an unprecedented paradigm shift, the implications of which are not yet fully understood, and for which the tools do not yet exit to fully take advantage of this new idea.

This new technology requires some new thinking when it comes to developing businesses that are built upon it. In the same way that the pioneer providers of email did not correctly understand the service they were selling for many years, new and correct thinking about Bitcoin is needed, and will emerge, so that it reaches its full potential and becomes ubiquitous.

Hotmail used familiar technologies (the browser, email) to create a better way of accessing and delivering email; the idea of using an email client like Outlook Express has been superseded by web interfaces and email ‘in the cloud’ that provides many advantages over a dedicated client with your mail in your own local storage.

Bitcoin, which will transform the way you transfer money, needs to be understood on its own terms, and not as an online form of money. Thinking about Bitcoin as money is as absurd as thinking about email as another form of sending letters by post; one not only replaces the other but it profoundly changes the way people send and consume messages. It is not a simple substitution or one dimensional improvement of an existing idea or service.

As I have explained previously, Bitcoin is not money. Bitcoin is a protocol. If you treat it in this way, with the correct assumptions, you can start the process of putting Bitcoin in a proper context, allowing you to make rational suggestions about the sort of services that might be profitable based on it.

If Bitcoin is a protocol and not money, then setting up currency exchanges that mimic real world money, stock and commodity exchanges to trade in it doesn’t make any sense. You would not set up an email exchange to buy and sell email, and the same thing applies to Bitcoin.

Staying with this train of thought, when you type in an email on your Gmail account, you are inputting your ‘letter’. You press send, it goes through your ISP, over the internets, into the ISP of your recipient and then it is outputted on your recipient’s machine. The same is true of Bitcoin; you input money on one end through a service and then send the Bitcoin to your recipient, without an intermediary to handle the transfer. Once Bitcoin does its job of moving your value across the globe to its recipient it needs to be ‘read out’, i.e. turned back into money, in the same way that your letter is displayed to its recipient in an email.

In the email scenario, once the transfer happens and the email you have received conveys its information to you, it has no use other than to be a record of the information that was sent (accounting), and you archive that information. Bitcoin does this accounting in the block chain for you, and a good service built on it will store extended transaction details for you locally, but what you need to have as the recipient of Bitcoin is money or goods not Bitcoin itself.

Bitcoin’s true nature is as an instant way to transmit money anywhere in the world. It is not an investment, or money itself, and holding on to it in the hopes that it will become valuable is like holding on to an email or a PDF in the hopes it will be come valuable in the future; it doesn’t make any sense.

Despite the fact that you cannot double spend them and each one is unique, Bitcoins have no inherent value, unlike a book or any physical object. They cannot appreciate in value. Mistaken thinking about Bitcoin has spread because it behaves like money, due to the fact it cannot be double spent. This fact however has masked Bitcoin’s dual nature of being digital, duplicable and not double spendable.

Bitcoin is digital, with all the qualities of information that make information non scarce. It sits in a new place that oscillates between the goods of the physical world and the infinitely abundant digital world of information, belonging exclusively to the digital world but having the characteristics of both. This is why it has been widely misunderstood and why a new approach is needed to design businesses around it.

All of this goes some way to explain why the price of buying Bitcoins at the exchanges doesn’t matter. If the cost of buying a Bitcoin goes to 1 This does not change the amount of money that comes out at the other end of a transfer. As long as you redeem your Bitcoins immediately after the transfer into either goods or currency, the same value comes out at the other end no matter what you paid for the Bitcoins when you started the process.

Think about it this way. Let us suppose that you want to send a long text file to another person. You can either send it as it is, or you can compress it with zip. The size of a document file when it is zipped can be up to 87% smaller than the original. When we transpose this idea to Bitcoin, the compression ratio is the price of Bitcoin at an exchange. If a Bitcoin is $100, and you want to buy something from someone in India for $100 you need to buy 1 Bitcoin to get that $100 to india. If the price of Bitcoin is 1 then you need 10,000 Bitcoins to send $100 dollars to India. These would be expressed as compression ratios of 1:1 and 10,000:1 respectively.

The same $100 value is sent to India, wether you use 10,000 or 1 Bitcoin. The price of Bitcoins is irrelevant to the value that is being transmitted, in the same way that zip files do not ‘care’ what is inside them; Bitcoin and zip are dumb protocols that do a job.

As long as the value of Bitcoins does not go to zero, it will have the same utility as if the value were very ‘high’.

Bearing all of this in mind, its clear that new services to facilitate the rapid, frictionless conversion into and out of Bitcoin are needed to allow it to function in a manner that is true to its nature.

The current business models of exchanges are not addressing Bitcoin’s nature correctly. They are using the Twentieth Century model of stock, commodity and currency exchanges and superimposing this onto Bitcoin. Interfacing with these exchanges is non-trivial, and for the ordinary user a daunting prospect. In some cases, you have to wait up to seven days to receive a transfer of your fiat currency after it has been cashed out of your account from Bitcoins. Whilst this is not a fault of the exchanges, it represents a very real impediment to Bitcoin acting in its nature and providing its complete value.

Imagine this; you receive an email from across the world, and are notified of the fact by being displayed the subject line in your browser. You then apply to your ISP to have this email delivered to you, and you have to wait seven days for it to arrive in your physical mail box. The very idea is completely absurd, and yet, this is exactly what is happening with Bitcoin, for no technical reason whatsoever.

It is clear that there needs to be a re-think of the services that are growing around Bitcoin, along with a re-think of what the true nature of Bitcoin is. Rethinking services is a normal part of entrepreneurialism and we should expect business models to fail and early entrants to fall by the wayside as the ceaseless iterations and pivoting progress.

Bearing all of this in mind, focussing on the price of Bitcoin at exchanges using a business model that is inappropriate for this technology simply is not rational; its like putting a methane breathing canary in a mine full of oxygen breathing humans as a detector. The bird dies even though nothing is wrong with the air; the miners rush to evacuate, leaving the exposed gold seams behind, thinking that they are all about to be wiped out, when all is actually fine.

Bitcoin, and the ideas behind it are here to stay. As the number of people downloading the client and using it increases, like Hotmail, it will eventually reach critical mass and then spread exponentially through the internet. When that happens, the correct business models will spontaneously emerge, as they will become obvious, in the same way that Hotmail, Gmail, Facebook, cellular phones and instant messaging seem like second nature.

In the future. I imagine that very few people will speculate on the value of Bitcoin, because even though that might be possible, and even profitable, there will be more money to be made in providing easy to use Bitcoin services that take full advantages of what Bitcoin is.

One thing is for sure speed will be of the essence in any future Bitcoin business model. The business that provide instant satisfaction on both ends of the transaction are the ones that are going to succeed. Even though the volatility of the price of Bitcoin is bound to stabilise, since it has no use in and of itself, getting back to money or goods instantly will be a sought after characteristic of any business built on Bitcoin.

The needs of Bitcoin businesses provide many challenges in terms of performance, security and new thinking. Out of these challenges will come new practices and software that we can only just imagine as they come over the horizon.

Errrr, what/who is striking back? (0)

macraig (621737) | more than 2 years ago | (#38485596)

Are you sure it's really BitCoin "striking back" and not a bunch of emotionally invested sycophants, disciples, apostles, and monetarily invested money launderers?

Re:Errrr, what/who is striking back? (0)

Anonymous Coward | more than 2 years ago | (#38485646)

Yes, apparently when you climb back up to 25% of what you used to be worth, that constitutes "striking back". See also: every time Tiger Woods had a good couple of holes in every tournament since 2009.

How to profit off your belief Bitcoin will fail (1)

ahbritto (83251) | more than 2 years ago | (#38485660)

Open an account at Bitcoinica.com, wire them some cash, set your leverage to 10:1, short Bitcoin.

Pyramid scheme baited for geek (0)

Anonymous Coward | more than 2 years ago | (#38485696)

It's just an old scam with a different front.

Money transfer is actually feasible (1)

Hentes (2461350) | more than 2 years ago | (#38485738)

While bitcoin has failed as a currency, it is true that it could be used for money transfer. If the receiving party cashes out regularly, there is not much risk involved, and the transfer itself is fast and cheap. The problem is with the cashing out part: just like Paypal or Mastercard refused to relay money to Wikileaks, bitcoin exchanges can also deny doing business with certain people. The advantages of P2P are lost when you want to get some money for your coins.

There will always be lies around money (0)

Anonymous Coward | more than 2 years ago | (#38485758)

There will always be a lot of lying around money, expect it. If you can't see the lies then you need to look a little more.

In terms of the variable value of Bitcoins there has been proposals to address this in various ways by alternative currencies. It's natural to have variation however in a normal currency. Bitcoin is still a commodity like any other, it's not a panacea it's not going to rescue the world on it's own but it can definitely make the biggest difference out of recent technologies.

Further, now the idea is out there, it's out there. Is the biggest Anarchist device ever

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